SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2007
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number 0-14492
FARMERS & MERCHANTS BANCORP, INC.
(Exact name of registrant as specified in its charter)
OHIO 34-1469491
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
307-11 North Defiance Street, Archbold, Ohio 43502
(Address of principal executive offices) (Zip Code)
(419) 446-2501
Registrant's telephone number, including area code
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).
Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares of each of the issuers classes of common stock, as
of the latest practicable date:
Common Stock, No Par Value 5,062,302
-------------------------- ----------------------------------
Class Outstanding as of October 31, 2007
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
Form 10-Q Items Page
--------------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
September 30, 2007, December 31, 2006 1
Condensed Consolidated Statements of Net Income-
Three Months and Nine Months Ended September 30, 2007
and September 30, 2006 2
Condensed Consolidated Statements of Cash Flows-
Nine Months Ended September 30, 2007 and
September 30, 2006 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 4-6
Item 3. Qualitative and Quantitative Disclosures About Market Risk 7
Item 4. Controls and Procedures 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 1A. Risk Factors 9
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits 9
Signatures 10
Exhibit 31. Certifications Under Section 302 11-12
Exhibit 32. Certifications Under Section 906 13-14
ITEM 1 FINANCIAL STATEMENTS
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
September 30, 2007 Dec 31, 2006
------------------ ------------
ASSETS:
Cash and due from banks $ 17,241 $ 23,583
Interest bearing deposits with banks 486 311
Federal funds sold 967 13,353
Investment Securities:
U.S. Treasury 215 388
U.S. Government 120,920 122,231
State & political obligations 41,418 45,495
All others 4,063 4,063
Loans and leases (Net of reserve for loan losses of
$5,499 and $5,594 respectively) 501,104 498,580
Bank premises and equipment-net 14,742 14,189
Accrued interest and other assets 19,066 14,903
-------- --------
TOTAL ASSETS $720,222 $737,096
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES:
Deposits:
Noninterest bearing $ 49,728 $ 60,211
Interest bearing 495,912 525,198
Federal funds purchased and securities
sold under agreement to repurchase 41,941 34,818
Other borrowed money 37,293 23,233
Accrued interest and other liabilities 5,701 5,904
-------- --------
Total Liabilities 630,575 649,364
SHAREHOLDERS' EQUITY:
Common stock, no par value - authorized 6,500,000
shares; issued 5,200,000 shares 12,677 12,677
Treasury Stock - 120,478 shares 2007, 36,180 shares 2006 (3,091) (1,060)
Unearned Stock Awards 17,820 for 2007 and 9,820 for 2006
Undivided profits 80,412 77,089
Accumulated other comprehensive income (expense) (351) (974)
-------- --------
Total Shareholders' Equity 89,647 87,732
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY $720,222 $737,096
======== ========
See Notes to Condensed Consolidated Unaudited Financial Statements.
Note: The December 31, 2006 Balance Sheet has been derived from the audited
financial statements of that date.
1
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of dollars, except per share data)
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
2007 2006 2007 2006
------------- ------------- ------------- -------------
INTEREST INCOME:
Loans and leases $ 9,501 $ 9,035 $ 28,468 $ 25,778
Investment Securities:
U.S. Treasury securities 3 19 11 56
Securities of U.S. Government agencies 1,389 1,045 4,107 3,404
Obligations of states and political subdivisions 405 515 1,236 1,633
Other 66 57 195 166
Federal funds 14 57 92 158
Deposits in banks 6 3 35 10
---------- ---------- ---------- ----------
Total Interest Income 11,384 10,731 34,144 31,205
INTEREST EXPENSE:
Deposits 4,702 4,126 13,724 11,427
Borrowed funds 875 711 2,399 1,955
---------- ---------- ---------- ----------
Total Interest Expense 5,577 4,837 16,123 13,382
---------- ---------- ---------- ----------
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 5,807 5,894 18,021 17,823
PROVISION FOR LOAN LOSSES 309 652 444 617
NET INTEREST INCOME AFTER
---------- ---------- ---------- ----------
PROVISION FOR LOAN LOSSES 5,498 5,242 17,577 17,206
OTHER INCOME:
Service charges 808 977 2,364 2,723
Other 720 651 2,097 1,958
Net securities gains (losses) -- (1) -- (9)
---------- ---------- ---------- ----------
1,528 1,627 4,461 4,672
OTHER EXPENSES:
Salaries and wages 1,928 2,093 6,080 6,194
Pension and other employee benefits 694 599 2,253 1,832
Occupancy expense (net) 186 192 457 486
Other operating expenses 1,891 1,079 5,259 5,005
---------- ---------- ---------- ----------
4,699 3,963 14,049 13,517
---------- ---------- ---------- ----------
INCOME BEFORE FEDERAL INCOME TAX 2,327 2,906 7,989 8,361
FEDERAL INCOME TAXES 623 789 2,215 2,257
---------- ---------- ---------- ----------
NET INCOME 1,704 2,117 5,774 6,104
========== ========== ========== ==========
OTHER COMPREHENSIVE INCOME (NET OF TAX):
Unrealized gains (losses) on securities 1,282 1,331 624 557
---------- ---------- ---------- ----------
COMPREHENSIVE INCOME (EXPENSE) $ 2,986 $ 3,448 $ 6,398 $ 6,661
NET INCOME PER SHARE $ 0.33 $ 0.41 $ 1.13 $ 1.18
Based upon average weighted shares outstanding of: 5,093,169 5,185,883 5,120,138 5,191,832
DIVIDENDS DECLARED $ 0.16 $ 0.15 $ 0.48 $ 0.43
No disclosure of diluted earnings per share is required as shares are
antidiluted as of quarter end.
See Notes to Condensed Consolidated Unaudited Financial Statements.
2
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
Nine Months Ended
---------------------------------------
September 30, 2007 September 30, 2006
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,774 $ 6,104
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and amortization 894 839
Premium amortization 228 535
Discount amortization (129) (211)
Provision for loan losses 444 617
(Gain) Loss on sale of fixed assets (30) 26
(Gain) Loss on sale of investment securities -- 9
Changes in Operating Assets and Liabilities:
Accrued interest receivable and other assets (1,342) 1,061
Accrued interest payable and other liabilities (386) (517)
-------- --------
Net Cash Provided by Operating Activities 5,453 8,463
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,417) (305)
Proceeds from sale of fixed assets -- --
Proceeds from maturities of investment securities: 41,711 37,457
Proceeds from sale of investment securities: -- 19,006
Purchase of investment securities (35,302) (19,336)
Purchase of Bank Owned Life Insurance (3,000) --
Net (increase) decrease in loans and leases (2,968) (32,700)
-------- --------
Net Cash Provided (Used) by Investing Activities (976) 4,122
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits (39,769) (19,675)
Net change in short-term borrowings 7,123 9,686
Increase in long-term borrowings -- --
Payments on long-term borrowings 14,060 (5,989)
Purchase of Treasury stock (2,031) (454)
Payments of dividends (2,413) (2,272)
-------- --------
Net Cash Provided (Used) by Financing Activities (23,030) (18,704)
-------- --------
Net change in cash and cash equivalents (18,553) (6,119)
Cash and cash equivalents - Beginning of year 37,247 22,589
-------- --------
CASH AND CASH EQUIVALENTS - END OF THE YEAR $ 18,694 $ 16,470
======== ========
RECONCILIATION OF CASH AND CASH EQUIVALENTS:
Cash and cash due from banks $ 17,241 $ 15,652
Interest bearing deposits 486 306
Federal funds sold 967 512
-------- --------
$ 18,694 $ 16,470
======== ========
See Notes to Condensed Consolidated Unaudited Financial Statements.
3
FARMERS & MERCHANTS BANCORP, INC.
Notes to Condensed Consolidated Unaudited Financial Statements
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10Q and Rule 10-01 of
Regulation S-X; accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the nine months ended September 30, 2007
are not necessarily indicative of the results that are expected for the year
ended December 31, 2007. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 2006.
The Company's Board of Directors declared a 4 for 1 stock split effective May
12, 2006. Therefore, all references in the financial statements and other
disclosures related to the number of shares and per share amounts of the
Company's stock have been retroactively restated to reflect the increased number
of shares outstanding.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
Statements contained in this portion of the Company's report may be
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by
the use of words such as "intend," "believe," "expect," "anticipate," "should,"
"planned," "estimated," and "potential." Such forward-looking statements are
based on current expectations, but may differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to,
factors discussed in documents filed by the Company with the Securities and
Exchange Commission from time to time. Other factors which could have a material
adverse effect on the operations of the company and its subsidiaries which
include, but are not limited to, changes in interest rates, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies of
the U.S. Government, including policies of the U.S. Treasury and the Federal
Reserve Board, the quality and composition of the loan or investment portfolios,
demand for loan products, deposit flows, competition, demand for financial
services in the Bank's market area, changes in relevant accounting principles
and guidelines and other factors over which management has no control. The
forward-looking statements are made as of the date of this report, and the
Company assumes no obligation to update the forward-looking statements or to
update the reasons why actual results differ from those projected in the
forward-looking statements.
CRITICAL ACCOUNTING POLICY AND ESTIMATES
The Company's consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, and
the Company follows general practices within the industries in which it
operates. At times the application of these principles requires Management to
make assumptions estimates and judgments that affect the amounts reported in the
financial statements. These assumptions, estimates and judgments are based on
information available as of the date of the financial statements. As this
information changes, the financial statements could reflect different
assumptions, estimates and judgments. Certain policies inherently have a greater
reliance on assumptions, estimates and judgments and as such have a greater
possibility of producing results that could be materially different than
originally reported. Examples of critical assumptions, estimates and judgments
are when assets and liabilities are required to be recorded at fair value, when
a decline in the value of an asset not required to be recorded at fair value
warrants an impairment write-down or valuation reserve to be established, or
when an asset or liability must be recorded contingent upon a future event.
Based on the valuation techniques used and the sensitivity of financial
statement amounts to assumptions, estimates, and judgments underlying those
amounts, management has identified the determination of the Allowance for Loan
and Lease Losses (ALLL) and the valuation
4
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (Continued)
of its Mortgage Servicing Rights as the accounting areas that requires the most
subjective or complex judgments, and as such have the highest possibility of
being subject to revision as as new information becomes available.
The ALLL represents management's estimate of credit losses inherent in the
Bank's loan portfolio at the report date. The estimate is composite of a variety
of factors including past experience, collateral value and the general economy.
ALLL includes a specific portion, a formula driven portion, and a general
nonspecific portion.
Farmers & Merchants Bancorp, Inc. was incorporated on February 25, 1985, under
the laws of the State of Ohio. Farmers & Merchants Bancorp, Inc., and its
subsidiaries The Farmers & Merchants State Bank and Farmers & Merchants Life
Insurance Company are engaged in commercial banking and life and disability
insurance, respectively. The executive offices of Farmers & Merchants Bancorp,
Inc. are located at 307-11 North Defiance Street, Archbold, Ohio 43502.
LIQUIDITY, CAPITAL RESOURCES AND MATERIAL CHANGES IN FINANCIAL CONDITION
In comparing the balance sheet of September 30, 2007 to that of December 31,
2006, a shifting has occurred in almost all areas. Loans show modest growth, of
around $2.5 million for the year, losing much of the momentum in growth that had
occurred in the first quarter. As the more expensive interest bearing deposits
of rate shoppers left the Bank, those funds were replaced by movements in
Federal Funds sold (decreased approximately $12.4 million), investments
(decreased by $5.5 million) and on the liability side of the balance sheet,
Federal Funds purchased and securities sold under agreement to repurchase (
increased $7 million) and other borrowed money (increased $14 million).
Liquidity remains adequate and capital continued to grow even with the
additional purchase of treasury stock. The Company had discontinued stock
repurchase activity for most of the quarter prior to the announcement of the
execution on September 7, 2007 of a definitive agreement for the purchase of
Knisely Bank. For the year, slightly over $2 million in shares have been
purchased. The Company may continue to repurchase its stock through the end of
the year. Overall, asset size has decreased $16.87 million as compared to year
end 2006.
Loan demand remains sluggish and competition is intense. The local economics of
our communities appears to be leveling out though the Bank has yet to see a
change in loan demand. The Bank plans on opening its new branch in Perrysburg in
November and looks for the new market to help spur growth opportunities.
Training has begun in earnest on improving the sales culture of the Bank with an
emphasis on determining our customers needs and wants. As the new skills are
implemented, growth opportunities should materialize. This is an on-going
process and will take the Bank a couple of years to properly train every
employee. The training has begun with the customer contact personnel first.
Loan quality continues to remain strong overall. However, a slight deterioration
has occurred with respect to loans past due over 30 days. Past dues ended
slightly higher at the end of September at 1.98%. Unlike much of what is heard
in the market with residential real estate, the increase in the past dues was
caused within the commercial portfolio. One of those issues has already been
resolved in the start of the fourth quarter which will bring the ratio back in
line with the 1% guideline.
The Knisely Bank merger will provide growth in assets of around $45 to $50
million in 2007 if closed before year end, leaving the Bank well positioned
heading into the new year for increased profitability. It also brings additional
opportunity for growth in new markets. The Bank will enter the Indiana market
with two well established offices, in the communities of Butler and Auburn. The
Knisely Bank has been in business for 125 years. This is the Bank's first
acquisition in its 110 years of operations.
5
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (Continued)
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Loan income for the third quarter of 2007 was $.5 million over the same period
for 2006. For the nine month period ended, September 30, 2007, an additional
$2.7 million in loan interest income was generated. This is partially due to the
slight growth in loans and has yet to be fully impacted by the latest rate drop.
The Bank has held most of its investment portfolio in agencies for better yields
over treasuries and tax equivalent municipal yields. Lower income in Federal
Funds Sold is due to the balance sheet shift discussed earlier.
Overall, interest income for the nine months ended September 30, 2007 shows
improvement over the same period for 2006 by almost 9.5% or $3 million. During
the same nine month period, interest expense grew by approximately 20% or $2.7
million. Increases in interest expense occurred in both deposits and borrowed
funds. Net interest income, therefore increased slightly in the nine month
comparison to last year. For the quarter, however, net interest income decreased
compared to last year.
With loan growth at a minimum, existing provisions were adequate for the loan
portfolio growth factor. Other factors influencing the calcualtion of the ALLL
include the local economy, the overall credit quality of the loan portfolio and
by analyzing specific accounts. Additional funding was required during the third
quarter for a specific commercial account allocation. This issue has since been
resolved and may result in the fourth quarter allocation being lowered as the
credit quality of the remainder of the loan portfolio has had minimal
fluctuation.
Other non-interest income has been lagging behind the same nine months ended of
a year ago. Service charge income, which includes overdraft privilege fees has
decreased significantly with respect to both the quarter and nine month period
comparisons. In comparing nine months, overdraft income is down $280 thousand
and is attributed to changes in customer behavior as the number of accounts has
remained fairly constant. Other non-interest income has improved decreasing the
overall loss of noninterest income. The improvement in other non-interest income
is not due to one product or service but rather a slight increase in all.
Salaries and expenses show a decrease in both the quarterly and nine months
comparisons. This has been due to the decrease in the number of employees which
has been accomplished through attrition. As the Bank gears up for the opening of
the new branch, new employees will be added which will make this decrease
smaller or disappear. Also noteworthy is the increase in the pension and other
benefits. These increases are being driven by higher medical costs as the bank
is partially self-insured. The Bank's share of claim expense is higher by over
$285 thousand year to date. Medical costs continue to be a concern due to the
rising cost of premiums and claims. The Bank has experienced more claim costs
with fewer employees involved.
Other operating expenses are in line when comparing the nine months ended for
each year, but the quarter ended September 30, 2007 shows a large increase as
compared to September 2006. 2006's fluctuation was due to a refinement in the
ALLL methodology dealing with unfunded loans. To provide comparison for the
September 2007 quarter, the quarterly expense is actually lower than September
2005's $1.976 million.
In summary, net income is behind last year's nine months ended which is impacted
by the quarter's numbers being down. With asset size similar on an average
basis, the issue comes back to the medical expenses and the refinement in ALLL
methodology shown in the provision for loan loss and other operating expenses.
The additional expense of the new locations will continue to negatively impact
earnings to some degree in the fourth quarter but should begin to enhance
earnings at some point in 2008.
The company continues to be well-capitalized as the capital ratios below show:
Primary Ratio 13.34%
Tier I Leverage Ratio 12.55%
Risk Based Capital Tier 1 16.26%
Total Risk Based Capital 17.28%
Stockholders' Equity/Total Assets 12.45%
6
ITEM 3 QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest rates and
equity prices. The primary market risk to which the Company is subject is
interest rate risk. The majority of the Company's interest rate risk arises from
the instruments, positions and transactions entered into for purposes, other
than trading, such as lending, investing and securing sources of funds. Interest
rate risk occurs when interest bearing assets and liabilities reprice at
different times as market interest rates change. For example, if fixed rate
assets are funded with variable rate debt, the spread between asset and
liability rates will decline or turn negative if rates increase.
Interest rate risk is managed within an overall asset/liability framework for
the Company. The principal objectives of asset/liability management are to
manage sensitivity of net interest spreads and net income to potential changes
in interest rates. Funding positions are kept within predetermined limits
designed to ensure that risk-taking is not excessive and that liquidity is
properly managed. The Company employs a sensitivity analysis in the form of a
net interest rate shock as shown in the table following.
Interest Rate Shock Interest Rate Shock
on Net Interest Margin on Net Interest Income
---------------------------- --------------------------
Net Interest % Change to Rate Rate Cumulative % Change to
Margin (Ratio) Flat Rate Direction Changes by Total ($000) Flat Rate
-------------- ----------- --------- ---------- ------------ -----------
3.28% -14.849% Rising 3.000% 19,699 -9.628%
3.48% -9.863% Rising 2.000% 20,403 -6.396%
3.67% -4.913% Rising 1.000% 21,103 -3.186%
3.86% 0.000% Flat 0.000% 21,797 0.000%
3.98% 3.073% Falling -1.000% 22,100 1.391%
4.04% 4.715% Falling -2.000% 21,937 0.641%
4.07% 5.605% Falling -3.000% 21,564 -1.069%
As the balance sheet mix changes, the predicted net interest margin improves as
compared to March and June 2007's interest rate shock table. The net interest
margin represents the forecasted twelve month margin. A portion of the
improvement in the predicted flat rate is due to the drop in rates that occurred
in September. The shock report has consistently shown an improvement in a
falling rate environment. The report for September shows an increase in the base
or flat rate of 33 basis points over June's with the Federal Funds rate having
dropped 50 basis points. This is consistant with the model predictions as June
showed improvement to take place in the net interest margin should rates fall.
It must be remembered that the shock report is based on a twelve month time
span. How the margin will be impacted in the fourth quarter is still dependent
on when pricing opportunities arise from maturities and repricing schedules. The
Bank continues to remain focused on gaining more relationships per customer as a
way to help control the cost of funds. Promotions continue to focus on special
incentives or rewards being based on a multiple deposit account relationship
with each customer. As higher priced certificate of deposits left the bank
during the most recent quarter, cheaper borrowings from the Federal Home Loan
Bank were used to replace the funds. This strategy was implemented to keep the
cost of funds in check as forty percent of the CD portfolio matured in the third
quarter. The margin would be better had the Federal Fund rate drop occurred at
the beginning of the quarter rather than near the end of September.
7
ITEM 4 CONTROLS AND PROCEDURES
As of September 30, 2007, an evaluation was performed under the supervision and
with the participation of the Company's management including the CEO and CFO, of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based on that evaluation, the Company's management,
including the CEO and CFO, concluded that the Company's disclosure controls and
procedures were effective as of September 30, 2007. There have been no
significant changes in the Company's internal controls that occurred for the
quarter ended September 30, 2007.
8
PART II
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 1A RISK FACTORS
There have been no material changes in the risk factors disclosed by
Registrant in its Report on Form 10-K for the fiscal year ended December
31, 2006.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Total Number of Shares (d) Maximum Number of Shares
(a) Total Number (b) Average Price Purchased as Part of Publicly that may yet be purchased under
Period of Shares Purchased Paid per Share Announced Plan or Programs the Plans or Programs
------ ------------------- ----------------- ----------------------------- -------------------------------
7/1/2007
to 170,702
7/31/2007
8/1/2007
to 170,702
8/31/2007
9/1/2007
to 35,000 $20.84 35,000 135,702
9/30/2007
------ ------ ------ -------
Total 35,000 $20.84 35,000 (1) 135,702
====== ====== ====== =======
(1) The Company purchased these shares in the market pursuant to a stock
repurchase program publicly announced on October 20, 2006. On that date,
the Board of Directors authorized the repurchase of 250,000 common shares
between October 20, 2006 and December 31, 2007.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5 OTHER INFORMATION
ITEM 6 EXHIBITS
2.0 Agreement of Merger and Plan of Reorganization dated as of
Septmeber 7, 2007 by and among the Registrant, The Farmers &
Merchants State Bank, Knisely Financial Corp and Knisely Bank
(incorporated by reference to Registrant's Current Report on Form
8-K filed with the Commission on September 10, 2007.)
3.1 Amended Articles of Incorporation of the Registrant (incorporated
by reference to Registrant's Quarterly Report on Form 10-Q filed
with the Commission on August 1, 2006)
3.2 Code of Regulations of the Registrant (incorporated by reference
to Registrant's Quarterly Report on Form 10-Q filed with the
Commission on May 10, 2004)
31.1 Rule 13-a-14(a) Certification -CEO
31.2 Rule 13-a-14(a) Certification -CFO
32.1 Section 1350 Certification - CEO
32.2 Section 1350 Certification - CFO
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Farmers & Merchants Bancorp, Inc.,
Date: October 31, 2007 By: /s/ Paul S. Siebenmorgen
------------------------------------
Paul S. Siebenmorgen
President and CEO
Date: October 31, 2007 By: /s/ Barbara J. Britenriker
------------------------------------
Barbara J. Britenriker
Exec. Vice-President and CFO
10